Arianna Huffington's influence over the sites has grown since AOL acquired Huffington Post and installed her as the company's top editor. However, it is unclear whether Huffington still oversees the community-focused journalism initiative. While the New York Times ran a piece suggesting that Huffington has gained more power within AOL, Business Insider published a retort, claiming that Huffington had actually lost control over sites like Engadget and TechCrunch.

When TheWrap spoke with individuals familiar with the situation, they described it as status quo but did suggest a streamlining of operations was taking place.

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Patch is a pet project of AOL CEO Tim Armstrong, who invested in it in 2007, when he was a top Google (GOOG) exec. At the time, Armstrong was frustrated that he could not get community news for the Connecticut suburb where he resides with his family.

AOL then bought Patch in 2009 shortly after Armstrong took the reins at the Internet giant and the company has poured tens of millions of dollars into the venture, opening hundreds of sites around the country. Each includes listings and news about city council meetings and sporting events, and relies on a local editor in each community and freelancers that receive modest compensation.

But it is not yet clear when Patch might begin to recoup those costs. The company has ramped up the number of unpaid bloggers and slashed freelance budgets amid rising media criticism of the venture for its impact on AOL's bottom line.

Armstrong has addressed those critiques on earnings calls, insisting in February that some Patch sites were already profitable and that many more would be soon.

This is also something Farnham addressed.

"I've never worked for a company that has been as scrutinized, criticized, and coal-raked as this one," Farnham wrote. "As likes to say, you'd think we were creating toxic waste, instead of, you know, free useful information."

Farnham suggested this criticism was a sign that members of the media and Wall Street analysts found it both "really interesting and potentially threatening."

While acknowledging that there is a great deal of work left to do at Patch, Farnham said both the revenue and content sides of the business are "killing it."

Farnham will join the company's Advisory Board and Brod said he might write a blog post from time to time.

Farnham's resignation note can be viewed at http://www.thewrap.com/media/column-post/top-editor-aols-patch-resigns-36956.